36 | BUSINESS TAXATION | Brokers had initially resisted attempts to be authority’s agents Stock dealers toe the line and help net Sh381m in capital gains taxes Authority says over half the traders have remitted their collections since January after getting two-week notice BY EDWIN OKOTH @Edwincowino edokoth@ke.nationmedia.com H alf of stockbrokers have complied with the Kenya Revenue Authority’s directive to collect and submit the Capital Gains Tax. KRA Commissioner of Domestic tax Alice Owuor said the number of those who have toed the line significantly contributed to the Sh381 million collected by mid-May. “Half of the 22 have complied and remitted outstanding taxes, and provided information on their transactions as required by the commissioner. Consequently, we are currently hard at work analysing the returns to confirm if they have fully complied. We are also in the process of pursuing those who are yet to comply,” Ms Owuor said in a statement. KRA had, on April 30, 2015, sent stockbro- kers a final demand giving them 14 days to submit records and remit money collected as CGT since the tax became applicable on January 1. Enforcement action “You are hereby given 14 days’ notice from the date of this letter to submit all outstanding taxes from January 2015 to April 2015 to avoid any enforcement action being taken without further reference to you,” read the letter. A fortnight ago, KRA disclosed that it had surpassed its capital gains tax collections target of Sh200 million by 190 per cent. Stockbrokers, under their umbrella body, the Kenya Association of Stockbrokers and Investment Banks (Kasib), have, however, maintained that modalities set for collecting the tax are hard to implement, and may disrupt the stock market to Kenya’s disadvantage. The taxman said the challenges faced by the brokers would be addressed in due course, and called for partnership to iron out the rough patches. “The resolution of the implementation challenges faced by the stockbrokers is a FILE | NATION Investment brokers on the trading floor of the Nairobi Securities Exchange. The Kenya Revenue Authority says the number of dealers now submitting capital gains tax has helped contribute to Sh381 million netted up to mid this month. 200 The amount of money in millions that the authority had set as target continuing process. KRA is committed and willing to assist them to comply whenever necessary. We are currently transforming to a service delivery oriented organisation and we will strive to nurture public confidence and trust, which we are very keen at forging with the stock brokers,” said Ms Owuor. The commissioner said CGT is a policy decision over which the authority has no control and expressed confidence that policy makers considered all relevant factors, including the impact on foreign investments before legislating the law. Stockbrokers last week expressed fears that the tax was likely to cause investors’ flight to other markets since trading will be slowed down. “More than half of the traders at the NSE are foreigners; if we make the entry and exit of the stock market complicated by the CGT, they will simply scout for other markets. There are better ways the government can make money from stock market, not this one,” said Kasib chief executive Willie Njoroge. KRA is planning legal action against the other half of stock dealers who are yet to comply with the taxation re-introduced last year after a 30-year suspension. Last week, Egypt froze plans to implement the capital gains tax for two years. The move was reported to have caused a 5.5 per cent climb in EGX 30 Index benchmark, a new high since July 2013. Cairo had proposed a 10 per cent levy as part of a raft of reforms aimed at widening the tax base and narrowing a budget deficit, a move that sparked investor outcry that it would damage the competitiveness of the country’s stock market. CfC Stanbic first quarter profit down 28 per cent BY NATION CORRESPONDENT A decline in foreign exchange revenues from South Sudan branch pushed CfC Stanbic Bank’s profit after tax lower by 28 per cent in the first three months of 2015. Earnings after tax in the period dipped to Sh1.15 billion down from Sh1.6 billion. The bank further at- tributed the poor performance to the current political impasse, which began in December 2013 and the drop in global oil prices that hampered economic activity in the country. CfC Stanbic Bank chief execu- tive Philip Odera, however, said the Kenyan banking business continues to record improved performance. “Our growth continues to be of good quality evidenced by the level of loan losses reported during the period. Our focus on delivering value to our customers continues to be a key objective in our underlying businesses,” Mr Odera said. Net interest income expanded by 21 per cent despite a 95 per cent growth in bad loans. The bank is, however, focusing on continued investment in technology to enhance service delivery. “With management remaining focused on utilising technology to deliver services and expecting no immediate change in the bank’s retail strategy of targeting middle to high income customers, we see no immediate cost pressures,” noted Standard Investment Bank analysts. RECOGNITION Securex bags health and safety certificate Securex Agencies has become the first security firm in Kenya to get the Occupational Health and Safety Assessment Specification Certificate after undergoing a successful auditing. The certificate enables organisations to put in place policies and procedures needed for a company to control and improve health and safety performance to achieve the best possible working conditions. It was handed over to Securex Group Managing Director Tony Sahni by Mr Ndolo Kioko, the certification manager, SGS Kenya. APPOINTMENT Radbone-Clark to distribute Hydra oil Radbone-Clark Kenya Limited, has been appointed as the local distributor for Hydra-Oil. The skin care product is manufactured by South Africa’s Shield Chemicals (personal care division). Following the appointment, Radbone-Clark, becomes the third global distributor of the beauty and dermatological product after South Africa and Robanda International, who distribute in North America, Europe, and South America. DAILY NATION Monday May 25, 2015 RISE OF DJIBOUTI Horn of African Nation wants to give Mombasa run for her money. P37 BRIEFLY BANKING Diaspora-backed firm to operate in Kajiado The Central Bank of Kenya has issued a licence to a Kenyan diaspora-backed microfinance institution to offer financial services to the pastoralist community and small enterprises in Kajiado County. Choice Microfinance becomes the 11th microfinancier to be allowed to operate community microfinance business. The firm will target flower farm workers and the micro, small and medium enterprises operating in the region. It will also serve nongovernmental organisations and higher learning institutions. MANUFACTURING Unilever growth plan bears positive results Four years into an ambitious sustainable living plan, Unilever says it is making a positive impact on its business in terms of growth, cost efficiency and resilience. The project involves brands that contribute to one or more of the plan and accounted for half the company’s growth in 2014, which expanded twice the rate of the rest of the business, the company says it its progress report. Many of the firm’s brands in the plan posted single and double digit growths during the period.